Japan auto companies safety failures point to deeper malaise

With margins squeezed by a stagnant domestic market and rivalry from China and South Korea, many factories have cut costs, reducing their reliance on workers in lifetime employment in favour of labourers on temporary contracts.REUTERS | October 30, 2017, 11:05 IST

The share of non-regular workers in the labour force has risen from 20 percent in the early 1990s to a record 37.5 percent last year - with the proportion in some companies higher still.

By Sam Nussey

TOKYO: A series of safety scandals at Japanese companies have put the country's lionized factory floor under scrutiny as manufacturers struggle with increased pressure on costs, stricter enforcement of standards and growing competition.

With margins squeezed by a stagnant domestic market and rivalry from China and South Korea, many factories have cut costs, reducing their reliance on workers in lifetime employment in favour of labourers on temporary contracts.

As they have done so, safety scandals have erupted across the country's much-vaunted manufacturing sector, with Subaru Corp on Friday joining Nissan Motor Co Ltd in admitting it failed to follow proper vehicle inspection procedures.

Earlier this month, Japan's third-largest steelmaker, Kobe Steel Ltd, said its workers had tampered with product specifications for years, leaving companies around the world scrambling to verify the safety of cars, planes, trains and electrical goods.

Unable to easily lay off "regular" employees, full-time employees with permanent contracts and pay scales based on seniority that formed the heart of Japan's post-war workforce, companies have increasingly come to rely on "non-regular" workers - temps, part-timers and short-term contract workers.

These non-regular workers allow companies to cut costs and adjust their workforce, said Koji Morioka, emeritus professor at Kansai University and an expert on workplace issues.

But it has led to a de-skilling of the factory floor, lowering standards and increasing the likelihood of wrongdoing and accidents, he said.

"The use of these 'disposable' workers is greatly increasing," Morioka said. "The loss of experienced, skilled workers on the factory floor is becoming more and more risky."

The share of non-regular workers in the labour force has risen from 20 percent in the early 1990s to a record 37.5 percent last year - with the proportion in some companies higher still.

The pay gap is stark, with regular workers last year on average paid 321,700 yen ($2,830) monthly compared with 211,800 yen for contract workers.

Companies are failing to produce the skilled workers needed to ensure standards are met in areas like safety at a time when scrutiny is intensifying around the world and lapses are met with greater criticism, said Parissa Haghirian, professor of Japanese management at Sophia University in Tokyo.

"There is a real human resource problem," she said, with the traditional model of hiring workers straight out of school or university, teaching them on the job and rotating them between departments no longer functioning well.